AUD/USD: 0.9165EUR/USD: 1.2785The Euro took another tumble today after the ECB's Asmussen clarified that rates in the EU will stay low for an extended period - in excess of 12 months. Other news not helping the Euro was the fact that the IMF cut its 2013 global growth forecast to 3.1% from a 3.3% prediction made in April and cut its 2014 growth forecast to 3.8% from 4.0%. On top of this, later in the day, S+P cut Italy's sovereign credit rating to BBB from BBB-which has kept the pressure firmly on the downside.
Technically, the Euro, having earlier looked like squeezing back above 1.2900, reaching 1.2897, has reversed sharply and made a potentially important move in breaking the recent 1.2796 low to close the NY session near 1.2780. This level is also the neckline of the larger head / shoulder formation that we have been watching for several months and we are now below it, which could potentially bring further losses in the days to come.
On the downside, the points to watch are firstly at today's low of 1.2753 and then at the 4 April low at 1.2744 below which, there is little to hold it ahead of 1.2680 (61.8% of 1.2042/1.3710), which should be strong, and there would be further bids at 1.2660 (13 Nov low). If/when we get under here, the real acceleration could begin as we head to 1.2586 (Aug 2010 low) and then 1.2435 (76.4% of 1.2042/1.3710).
On the topside we need to regain 1.2800, which would make today's move look like a false break and could bring about a bit of a squeeze to higher ground. Should this occur, then today's session high is 1.2897, above which we would head back to the top of the current channel at around 1.2930. I cannot see it today.
Note that the DXY continues to head higher, today reaching 84.75. Support is now at 84.50, with the target being at 85.80.(see http://www.fxcharts.com.au/dxy-points-to-a-higher-us/ for full details)
The highlights today will be the FOMC Minutes and Bernanke's Speech and until then I don't see an awful lot to move things around. The 4 hour charts are showing some minor bullish divergence and we could see the odd bounce but the dailies continue to point lower and I suspect that the low 1.2700 area will soon be tested. In the meantime leave room for bounces as the 4 hour charts unwind. We will be adding to our shorts if we see a bounce into the 1.2850/1.2900 in the coming session.
German CPI, US FOMC Minutes, Wholesale Inventories, Bernanke Speech
Economic data highlights will include:
German CPI, US FOMC Minutes, Wholesale Inventories, Bernanke Speech
